Cannabis sellers seek clarity on strict rules on advertising

Hey there, time traveller! This article was published 18/9/2018 (627 days ago), so information in it may no longer be current.

Canadians shouldn't expect to see billboards, TV and radio commercials, or newspaper advertisements for cannabis when legalization begins Oct. 17. In fact, the federal government's strict rules on cannabis promotion effectively mean Canadians shouldn't see any traditional advertising for marijuana companies in public, where minors could be exposed to it.

But beyond that sweeping prohibition, even cannabis industry professionals and the lawyers who advise them remain unsure exactly what kinds of promotional campaigns will be permitted by federal cannabis regulator Health Canada.

Industry players have taken to asking Health Canada outright whether particular advertising plans would comply with the new rules, says Rebecca Brown, CEO and founder of Toronto-based cannabis marketing firm Crowns Agency. But the regulator has been unwilling to rule on specific proposals, she says, instead advising companies to study the legislation and act accordingly.

"I talk to marketers, I talk to in-house counsel in the industry all the time, and everyone seems to be confused or stuck on the same things," says Brown.

"And really what it boils down to is, can we get some clarity on specific use cases so that we can all proceed and make plans and be compliant?"

Because of that uncertainty, Brown expects some cannabis industry players might hesitate to launch new promotional campaigns at the outset of legalization.

"I'm hopeful that within the first ten to twelve weeks, people will try some things out," she says.

Promotional restrictions in the federal Cannabis Act will apply to all media, including newspapers and magazines, digital content, signage, broadcast media, and communications sent by mail. They don't only apply to promotions for marijuana itself, but also to accessories and cannabis-related services. Violations could carry heavy penalties, including prison time and fines of up to $5 million, or administrative penalties of up to $1 million.

The law prohibits promoting cannabis in any way that "could be appealing to young persons," or by using testimonials or celebrity endorsements. Mascots are also forbidden, as are false advertising and promotions in foreign media. Presenting a cannabis product — or even cannabis "brand elements" like brand names, logos, or slogans — can't be done in any way that "evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring."

Still, the law leaves plenty of room for interpretation, says cannabis business attorney Trina Fraser of Brazeau Seller Law in Ottawa.

"There are certain things I can't give (clients) an absolute blessing on, because I just don't know yet, until we see it done and how or if Health Canada reacts to it."

Health Canada "has been holding information sessions to promote awareness and understanding of the Cannabis Act and its regulations," wrote a spokesman in a statement.

"This outreach includes topics such as the prohibitions contained in the Cannabis Act with respect to the promotion of cannabis, cannabis accessories and services related to cannabis."

Cannabis companies are responsible for ensuring their own compliance with the law, wrote the spokesman, who added Health Canada "is engaging all provinces and territories, federally licensed producers and other interested parties, such as advertising and promotion organizations, to help them understand the new legislative and regulatory requirements."

Certain promotional activities will clearly be allowed under the federal marijuana law.

"We know that you're going to be able to communicate directly with a database that you've developed of customers or potential customers... as long as you've taken reasonable steps to ensure that it's not being sent to a minor and being accessed by a minor," says Fraser.

"We know that there will be some promotion that's permissible within (cannabis) stores," she adds, as long as minors aren't allowed in those stores. Even within age-restricted cannabis stores, the law limits promotions to providing factual information about a product's availability and price.

DAVID FRIEND / THE CANADIAN PRESS FILES

Representatives for Tweed Inc. mingle with concertgoers at the Field Trip music festival in Toronto in June. Companies have been unclear how to stay within the rule of law when it comes to advertising and promotions.

"I think that we feel fairly confident that private (promotional) events, or events that are in age-restricted environments... are compliant (with the law)," says Brown.

"I think there's some fuzziness around the content of those events."

Cannabis companies are especially concerned about how far they need to go to ensure digital promotions don't reach minors, says Brown. The traditional approach of "age-gating" — asking a website user whether they're old enough to legally view the content — might not be enough, she believes.

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"Ultimately it's to everyone's benefit for the industry to be able to promote itself within reasonable constraints, but promote itself enough that it has a chance to begin to get some traction with people, and disrupt the black market, which is why we have a legal framework," she says.

Amid all the uncertainty, Brown says one thing is clear: the future of cannabis advertising in Canada won't look anything like traditional exercises in brand-building.

"It's not going to be like a big shiny thing that you can point at, like a Superbowl ad. It's going to be lots and lots of smaller things that together add up to connect people to the world of a brand."

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